Thursday, July 14, 2022

Federal Circuit Awards Sanctions for Allegedly Frivolous Appeal

The case is Pop Top Corp. v.  Rakuten Kobo, Inc., a nonprecedential per curiam opinion with a dissent by Judge Newman.  Defendant Kobo moved for sanctions against plaintiff Pop Top under Fed. R. App. P. 38, arguing that the “appeal was frivolous," and "request[ed] attorneys’ fees plus double its costs as damages. Kobo further requests we hold Pop Top and its counsel jointly and severally liable for the sanctions” (p.2).  According to the per curiam opinion, “The sole claim of the patent requires, among other things, an ‘internet document [that] includes code for invoking a highlighting service to operate with the internet document” (id.).  “Pop Top contended that the eBooks Kobo serves via its eReader application are the claimed internet documents because they are ‘highlightable’ and ‘include code,’” but  it did not  ”identify any particular code in the eBooks that allegedly invokes a highlighting service, despite having access to the code in two sample eBooks” (id.).  In response, “Kobo repeatedly explained to Pop Top that all code related to highlighting is in the Kobo App, not in individual eBooks” (id.)  The district court agreed and granted summary judgment of noninfringement, after which the Federal Circuit affirmed without opinion.  Kobo then moved for appellate sanctions.  From the per curiam opinion:


“Kobo argues Pop Top’s appeal was frivolous as filed. We agree. The district court determined that Pop Top offered ‘no evidence whatsoever that the eBooks for the Kobo App include "code for invoking a highlighting service," despite being in possession of a complete eBook file.’ . . . Because it ‘utterly fail[ed]’ to identify any evidence that the eBooks  contain code for invoking a highlighting service . . . Pop Top had no reasonable basis to appeal the district court’s summary judgment.


“Kobo further argues Pop Top’s appeal was frivolous as argued. Again, we agree. . . .


“Rule 38 authorizes us to award single or double costs and “just damages,” which may include attorneys’ fees. . . . Kobo requests attorneys’ fees and double its costs. The total amount requested is $140,964.46, which includes $53,216.19 in attorneys’ fees relating to this motion. We find the latter amount unreasonable. It took Kobo’s counsel 107.6 hours to fully brief and argue the merits of this appeal. Mot. Ex. A ¶ 7. The same counsel then spent about 83 hours briefing Kobo’s sanctions motion. See id. ¶¶ 8-9. Given that the sanctions briefing is only 28 pages long and largely parrots the merits briefing, counsel should have spent considerably less time preparing the sanctions briefing. We find that $20,000 is a more reasonable estimate of the actual cost of the sanctions motion. Accordingly, we award Kobo $107,748.27” (pp. 5-6).

The per curiam opinion closes by finding the plaintiff’s counsel jointly and severally liable, noting that "Pop Top does not oppose joint and several liability in its response to Kobo’s sanctions motion" (p.7).  In dissent, Judge Newman writes that although she “agree[s] that Pop Top did not have a winning case,” “due process and the Federal Rules provide the right of appeal. The United States has continually rejected the ‘loser pays’ philosophy of many countries, for our view of justice under law includes appellate review.  .  . . An adverse decision on appeal of the merits does not  subject the appellant to sanctions because the case was weak” (dissent pp. 1-2).  Judge Newman notes that the plaintiff's appeal from the district court's award of fees is separately pending before the Federal Circuit.

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